AUSTRALIA- Location-based targeting does not work as well as you think it does, according to a pair of technology companies that claim they’re set to fix the problems- and deliver a 20 per cent uplift in campaign metrics.

John Stones, head of product and innovation for audience-management company MEDIATA, explained that location targeting of advertising based on IP (Internet Protocol) addresses has limitations because of the disorganised way internet organisations have handed out these addresses.

An IP address can reliably identify the country and usually the state or province within a country where the user is located. “But it breaks down the more granular you go,” Stones told the Campaign Asia-Pacific. “It falls apart as you get the local level, and it’s useless at the street level.”

The problem comes down to errors in the IP databases used in targeting campaigns. For example, an address reported to be in Sydney may in fact be in Perth, he said. Obviously, this limits the effectiveness of any campaign with an appeal based on the user being in Sydney. And you can forget about targeting a specific district in a particular city.

In a partnership announced yesterday, MEDIATA and Skyhook, a specialist in location technology, claimed that they’ve demonstrated the campaign-performance gains that more accurate targeting can deliver. In essence, they’re promising the kind of resolution marketers enjoy with mobile devices, but across all kinds of devices.

Skyhook uses the location data furnished by WIFI routers to correct errors and add additional data to an IP-Address database. So the company can tell when that example IP address is actually in Perth, and it can match IP addresses with the latitude and longitude coordinators of specific WIFI equipment. MEDIATA then incorporates these data points into an audience-management platform.

For the past 10 months, the companies have been test-driving the technology on campaigns comprising 500 million impressions with Australian and New Zealand client in banking, retail, car retail, telecommunications and real estate.

As Stones explained, the companies chose campaigns with a call-to-action based on specific location. The test involved dividing the impressions in those campaigns. Some used the Skyhook-enhance databased; the rest used other commercially available IP databases.

The results? According to Stones, the subsets of the campaigns using the enhanced data enjoyed a 20 per cent increase in whatever performance metrics were in place for those campaigns, compared to the subset using the regular IP data.

“That 20 per cent is an average”. Stones said “there were outliers, but it provided an improvement in a lot of verticals. And 5 per cent is usually seen as a very good improvement in this industry, so it’s significant.”

Stones, who comes across as a down-to-earth, results-oriented person, said that he sees the work as a proof-of-concept and stresses that for MEDIATA, its part of a continual process of incremental improvements in profile data across many parameters.

People have been saying they can do location targeting for ages, but they’ve basically been lying about it,” he said. “This technology is catching up with what people thought they could already do.”

The company now stands ready to deploy the technology at scale, he added. Work is underway to bring the capability to Hong Kong, where MEDIATA already has an office, and Singapore, although he said the project is not as far along there. Nonetheless, the company promises regional coverage by the end of 2014.